Zimbabwe: A Disaster Zone

Zimbabwe: A Disaster Zone

Once a shining beacon of democracy and good governance, Zimbabwe has slowly but surely slumped into the laughing stock it is today.

A recent call by Zimbabwe’s parliamentarians for government to declare the health sector a disaster area is just but a reflection of the state of the country; a disaster in every sense of the word.

High unemployment, shortage of money, a dying manufacturing sector, social unrest; all these point to the disaster that this southern African nation of 14 million people is experiencing.

Once a shining beacon of democracy and good governance, Zimbabwe has slowly but surely slumped into the laughing stock it is today.

Zimbabwe’s health sector hit its lowest ebb during the hyperinflationary environment of 2008. Although the situation significantly improved during the government of national unity, the sector has slumped into serious distress again.

Hospitals and clinics are inundated with a high disease burden constituting impoverished patients struggling to pay, the workforce is poorly remunerated resulting in job actions.

Again, national budget allocations are never received in full while drug stock-outs characterise the sector with vulnerable groups the worst affected by the crisis.

Parliamentarians this week expressed bewilderment at the government’s delay in declaring the country’s crisis-hit health sector a national disaster.

State hospitals are poorly funded, resulting in stock-outs critical drugs while staff morale has hit rock bottom due to government constantly delaying the payment of salaries.

Gibson Mhlanga, the Health ministry’s acting permanent secretary together with Finance manager Heather Machamire, had told a Parliamentary public hearing that only $8.7m had been released from the $28m 2016 recurrent expenditure.

For capital expenditure, just $1.5m from the $20.6 million has been released by treasury, a month before the 2017 budget is announced.

This is just but one of the many disasters that Zimbabwe is facing, and whose solution is nowhere in sight.

The disaster of domestic demand has been affected by a frenzy of company closures and job losses that saw thousands of workers thrown out of employment in the first three months of the year.

A staggering 55 000 lost jobs in 4 500 company closures between 2011 and 2013, according to Finance minister Patrick Chinamasa.

Unemployment is a disaster. It is at its highest of 95 percent – 60 percent of that being youths. Companies are closing down by the day and churning thousands into the streets and into unemployment.

Employment in the manufacturing sector has dropped to 85 000 from 200 000 in 2009, according to the Confederation of Zimbabwe Industries, and 4 600 companies have closed down in the past three years, according to RBZ data.

Finance minister Patrick Chinamasa said in September that the State may cut 25 000 civil service jobs as it struggles to meet pay obligations.

The country, which does not have its own currency, has been heavily reliant on a basket of currencies, with the United States dollar being the dominant currency. But this too, is now in short supply. Banks queues are now the order of the day.

And banks have resorted to limiting how much one can withdraw from one’s account to prevent hoarding of dollars, used in 95% of all transactions in the country, and some shops reported they’re running short of essential goods.

Some banks are now offering a measly US$50 per person per day; meaning one has to join the long winding bank queues every day for a week to withdraw the minimum US$300 which is the standard salary, if one is lucky.

Zimbabwe owes lenders including the World Bank and Africa Development Bank about $9 billion, according to the Finance ministry.

Zimbabwe ditched its own currency and adopted a multi-currency regime in 2009 to arrest hyperinflation, which had skyrocketed to a record 500 billion percent by December 2008.

Hyperinflation eroded the buying power of the domestic currency, forcing gross domestic product (GDP) to shrink by 50 percent in a decade, destroying weaker banks and wiping out entire savings.

Zimbabwe’s economy grew by an average 10 percent between 2009 and 2012 after a coalition government agreed to dump the free-falling Zimbabwe dollar, but growth started tapering off after the ruling Zanu PF party formed a new government following the trouncing of the opposition Movement for Democratic Change (MDC-T) led by Morgan Tsvangirai in disputed polls held in 2013.

Government has decided to introduce a local currency, but hidden as “Bond notes”, which are said to have the support of a US$200 million Afrexim bank loan. The general public has made vocal its reluctance to use the bond notes, arguing it’s a way to re-introduce the much-derided Zimbabwe Dollar through the back door.

An earlier announcement of plans to introduce the currency sparked riots in Harare even after the government said the notes, which will be legal tender only in Zimbabwe, will be backed by a $200-million loan from a multilateral lender.

Not so lucky are pensioners who, having already made their contribution to the country in yesteryear, expect a better treatment today, but not so. Their pensions come late, if at all. The banks they use – building societies – are reliant on commercial banks for their cash. In the event they get no remittances, they have nothing to disburse.

As if colluding, nature too has joined in. Zimbabwe is going through its worst drought in decades. Crop failure is widespread. Government has been forced to import the staple maize, at huge cost using coffers that are tottering on edge.

Because of the drought, water levels have depleted to worrying levels, forcing people to fetch water from any available source.

“We are very concerned about the severe water shortage throughout the country, both in urban and rural areas,” Health Minister David Parirenyatwa said.

“People are resorting to using very scarce resources such as shallow wells -- some of it is muddy water and one can just imagine what sort of organisms can be found in there. Our worry is that if flash rains come this is what causes diarrheal diseases such cholera, dysentery and typhoid.”

Government is also failing to pay its workers, the 200 000-strong civil service, and is now resorting to staggering their pay dates as it scurries around searching for money. The only sector with an assured pay date is the security sector.

As Zimbabwe’s economy continues to die, the business community has joined ordinary citizens in rejecting the government’s imminent introduction of the much-distrusted bond notes, advocating instead greater use of the South African rand.

The influential Confederation of Zimbabwe Industries (CZI), says its members reject the surrogate currency in toto.

“The announcement of bond notes has caused widespread panic…While the bond notes make sense as a technical solution we have completely failed to sell the concept to our members,” CZI vice president Sifelani Jabangwe said.

“Confidence is too low for the introduction of the bond notes in the meantime and we therefore recommend the cancellation of the plan and have them replaced with the rand.

“We also suggest that the minister of Finance starts presenting his budget in rand instead of United States dollars . . . Business will encourage its members to use rand,” he said.

This latest rejection of the surrogate currency by a key constituency, comes as the Zimbabwe Revenue Authority (Zimra) has also warned that bond notes will further destabilise the country’s battered economy.

To worsen matters for Zimbabwe, the World Bank and the International Monetary Fund (IMF) have also recently painted gloomy outlooks for the country’s economy for the next two years, as citizen unrest grows.

The central bank has also in the meantime warned that the current cash shortages will worsen in the next few months.

Reserve Bank of Zimbabwe deputy governor Kuphukile Mlambo warned that the end of the tobacco season and the depreciation of the rand and British pound would further exacerbate the current cash shortages.

“We are no longer an economy that is dependent on manufacturing exports. We are totally dependent on four commodity exports — tobacco, gold, platinum and chrome,” he said.

“But these minerals do not always perform well or deliver all the time. For example, the tobacco season has just ended now and between now and February we have no tobacco money. This does not really improve the situation.

“Remittances are also in trouble now because someone who was sending money back home to their parents, say R1 000 … the money is now coming in at say $60 … so, although the rand amount is the same, the dollar value has fallen.

“It’s the same as those in the United Kingdom where the pound has also fallen. So in view of all these dynamics, everyone should do all they can to spare cash because the money just isn’t there,” Mlambo added.

The pending introduction of the bond notes has caused panic among ordinary Zimbabweans and traders alike, who have been swamping banks in a bid to withdraw their savings.

Zimra chairperson Willia Bonyongwe has said the planned introduction of the notes had brought uncertainty and worsened cash shortages as consumers held onto their dollars.

Zimbabwe’s economy is dying on the back of what analysts say are bad policies and gross corruption by the country’s leaders.